Samsung Enters US Data Services Market

Samsung, knownfor its portable CD players, cellular phones, and microwave ovens, made itspresence known in the US data services market last week with the opening of itsfirst US data center. Samsung SDS, the IT arm of Samsung, has had a large dataservices presence in the Asian market for some time, but the new Piscataway,N.J.-based data center, known as the e-DataCenter, is the first in a series ofmoves into the US market.

The 20,000square foot e-DataCenter will provide co-location services, bandwidth, severaltiers of managed services, remote support services for clients who wish to hostfrom their own servers, and application service providers (ASP) and enterpriseresource planning (ERP) services. The data center features an SAP and HP-UXback end, with Sun Enterprise servers for e-commerce applications.

Napier, aproduct from Samsung-backed Invenio, provides the data center with itsmonitoring capabilities. Napier monitors mission-critical system events in thedistributed environment, specifically handling process automation, businessimpact notification, process control, and business reporting. Additionally,Samsung’s UniPark technology provides knowledge management solutions for thecorporate intranet or Internet, and can be distributed from the e-DataCenter.

Thee-DataCenter, according to Daniel Cho, director, Eastern sales and marketing,at Samsung, is targeted at midsize enterprises -- those with revenue of $250million or less and 500 employees or less. Samsung is also planning atechnology initiative called UniERP to provide ASP and ERP services to thislevel of enterprise. Cho also notes that Samsung SDS has plans to open two moredata centers in the US, as well as 10 new data centers in the next three years.

Samsung isoptimistic about the new e-DataCenter and its future data center offerings, butthe analyst outlook is mixed.

The problemSamsung is looking at is that the market is nearly saturated with data centersand co-location services. According to Warren Wilson of Summit Strategies,there is so much data center capacity planned that there won’t be enough demandfor it all. Not only is the market saturated, but it’s saturated with “lots ofheavy hitters,” says Amy Mizoras, senior analyst at IDC.

However, Mizorashas a positive outlook for the data services market in the longer term. “Thefloors are quickly becoming a commodity,” she says.

Samsung may alsoface the challenge of providing its management services directly from the datacenter. ASPs lean toward controlling their own managed services, and for themto do that, they would need to own their management services, Mizoras says.

Ironically,Samsung could gain market share for the same reason that it could lose it. ASPstend to control their managed services, but they also have service-levelagreements with their customers to exercise a higher level of control over thecontent in their servers. Because it would be cost-prohibitive for ASPs tobuild their own data centers, they tend to sign on with larger data centerssuch as Samsung’s.

Mizoras notesthat Samsung could give ASPs the opportunity for a global presence with asingle provider with its entry into the US data service market. This couldultimately trigger a rapid expansion of the data services market several yearsdown the road. Data service providers have been “setting up for a boom, butit’s several years off,” Mizoras predicts.

Samsung SDS Co. Ltd., Seoul, Korea,
IDC, Framingham, Mass.,
Summit Strategies Inc., Boston,